When you are finished with those three mini-projects, we will be starting a budget project. You are going to be creating a budget for your first year out of college. To start, open Microsoft Word, create a new document named "Budget Information," and type out a list of the following in order. Write at least one sentence for each item in the list so that you can understand what all of your numbers mean later. The more details you include, the easier it will be to create and adjust your budget!
What is your job, and how much is the starting salary is for your job (hint: try searching “average starting salary for __”)? List this information in your document. Try to be realistic – even if you plan on being an NFL quarterback or famous actress, choose a regular job for the purposes of this project. Pick a job that you would be interested in doing for your career.
Budgets are organized by month. How much will you earn per month? Divide your starting salary by 12 and list it in your paper.
Where will you live, and how much money will you be able to pay per month in rent? Notice on the sample budget I gave you that they assume that housing (rent, mortgage, etc.) will cost you roughly 18-25% of your salary. If you need, use an equation in Excel or a calculator to figure out exactly how much money that is.
Try to find an apartment in the area for the amount of money that you have to use. If you cannot find one, you might have to adjust your budget! Once you find an appropriate apartment, put a link on your document so you can find it again.
Look up numbers for how much renter’s insurance is, and note how much you will need per month.
You need a car! Are you buying new or used? Find a car that you want to buy, and link to it on your document. Figure out how much money per month you will have to pay if you take out a 5 year loan (60 months).
Now that you have a car, you need insurance for that too. How much does it cost?
The average American has a commute to work of 24 minutes. That means gas money! Find out how big of a gas tank your car has, assume you will use 3 gallons of gas per day driving to and from work (plus any other errands you need to run, PLUS how many gallons you might use on the weekend going places), figure out how many gallons a month you will use, and assuming that gas cost $3.19 per gallon right now, decide how much money you will need in a month for gas. List all of these numbers in your document so you can double check your math later if needed.
You apartment needs utilities turned on! How much per month will you need to pay for water, gas, electric, and garbage service? Did you happen to find an apartment that already paid for some of these things for you? List those numbers here.
Do you own a cell phone? How much does that cost per month? Do you have unlimited texting? How about a data plan? What service provider are you using?
What kind of “luxuries” can you afford? Do you have enough money to have internet service or cable/satellite service at home? If so, list out those costs.
You went to college, which means now you most likely have college debt to repay. Assume that you will pay a flat $200 a month in college loan payments (sometimes this number is higher or lower, depending on the amount of debt and the person).
Are you going to save any money in a savings account for emergencies (cars break down, couch breaks, got the flu and needed to visit the doctor, etc.)? Decide how much money you think should be saved each month, and list that amount.
You need to eat, don’t you? Search for average grocery costs and decide how much you will pay for food each month.
Are you getting health/life insurance? Does your job provide them as part of your salary package? Make those decisions and note them here.
Taxes are no fun. Click here and use the chart to decide what percentage of your salary will go to taxes.
Are you going to tithe? The most general recommendation is to give 10% of what you own to the church. Decide what you would like to give and include that amount in your document.
Finally, you need to have a social life. What are you willing to spend every month on “having fun”? Think about this – dinner and a movie with a friend would probably cost you $25 or more. Going to a sporting event could cost anywhere from $25-100 depending on how much you pay for parking, tickets, and food. Will you take lunch with you to work or will you go out with coworkers to a restaurant every day? What if you need new shoes or a new coat? Don’t forget sending birthday presents to family and friends! Some label this category as entertainment, but a better term is “fun money”.
Take all of your information and start creating your budget. Open Excel and create a spreadsheet named "Budget." You will want to include a line for every single item (even if things like water and electric are included in your rent, just write included or N/A in the box). Enter credits (paychecks, birthday money, or a second income if you have two jobs) as money, and turn that text green. Enter debits (payments, money that you take out of the bank) as negative money (as in -$80 for electric bill) and make that text red. At the bottom, sum up all of your money columns and see what you are spending.
In the box next to your total money spent, enter an equation that will tell you if you spent too much or two little. For example…
=IF(B27>0, “We did it!”, “We are out of money!”)
What happens if you are out of money? It’s time to adjust! You have some options…
Renting a cheaper apartment. Maybe a 1 bedroom instead of a 2.
Finding a roommate. Now all your utility bills are split in half, and so is rent! Note – you cannot have a 1 bedroom apartment and a roommate. That’s cheating.
Buying a used or older car. Be careful, older cars might mean more trips to the mechanic to fix things.
Not getting TV or internet in your apartment. It saves money, but it might be painful. You could always cancel TV and sign up for Netflix ($17 a month).
Cancelling the data plan on your cell phone.
Make your “fun money” budget smaller. For some people this is their only option.
Save your budget document and upload it to your dropbox. Upload BOTH your document and your spreadsheet. I will have a conference with each of you to make sure that your budget is finished before you do the next part. After you have had your conference, click here to go to the last step of the budget project!
Take all of your information and start creating your budget. Open Excel and create a spreadsheet named "Budget." You will want to include a line for every single item (even if things like water and electric are included in your rent, just write included or N/A in the box). Enter credits (paychecks, birthday money, or a second income if you have two jobs) as money, and turn that text green. Enter debits (payments, money that you take out of the bank) as negative money (as in -$80 for electric bill) and make that text red. At the bottom, sum up all of your money columns and see what you are spending.
In the box next to your total money spent, enter an equation that will tell you if you spent too much or two little. For example…
=IF(B27>0, “We did it!”, “We are out of money!”)
What happens if you are out of money? It’s time to adjust! You have some options…
Save your budget document and upload it to your dropbox. Upload BOTH your document and your spreadsheet. I will have a conference with each of you to make sure that your budget is finished before you do the next part. After you have had your conference, click here to go to the last step of the budget project!